Food Retailers Chart More Positive Business Environment and Financial Performance

Sixty percent of food retailers reported higher customer counts and 46 percent noted stronger transaction sizes in fiscal year 2012 compared with the prior year, according to a new Food Marketing Institute (FMI) financial and business review survey performed by 210 Analytics, LLC. For 2013, food retailers remain optimistic, with 58 percent anticipating business conditions to improve and 64 percent expecting further increases in the average shopping basket.

The analysis, Food Retailing and Financial Business Review Survey, included a financial review of fiscal year 2012; a business environment and operational review for 2012 and 2013; and shrink metrics and reporting. Food retailers’ confidence in the business environment and their financial performance were parallel with slow, but steady, improvements across key economic indicators, such as the gross domestic product, unemployment figures and the consumer confidence index.

The in-depth survey explored food retail staffing; salaries and benefits; health care costs and reform; and operational shrink. Key findings include:


An area with one of the strongest signs of improved business conditions is that of staffing and benefits. The vast majority of respondents are adding or maintaining corporate and store associate levels, following several years of staff reductions. The outlook for 2013 anticipates greater levels of hiring and even fewer staff reduction. For example, in 2010, 35 percent of companies reduced store-level staffing, compared with a prediction of 9 percent for 2013.

Salaries and Benefits

Another sign of improved conditions are the number of companies that implemented hourly pay and salary increases of 2.5 percent and 2.4 percent, respectively. Nearly two-thirds increased hourly pay in 2012 and 74 percent gave raises for salaried associates. Retailers held the status quo on most benefits, with employee training being the most likely area of increased budget allocations.

Health Care Costs and Reform

In newly defined data, net dental and medical health care costs, including COBRA and administrative fees, as a percentage of total non-fuel and pharmacy sales averaged 1.47 percent in 2012. With costs rising year-over-year for the majority of retailers, 77 percent noted the need to pass along a portion of the cost increases to employees. As to the impact of Health care reform (PPACA), 88 percent said it will increase health care costs in 2013 and 96 percent believe it will further increase expenses in 2014. The most common actions taken to control health care coverage costs are encouraging healthy living and implementing plan modifications that will decrease costs.

Operational Shrink

While some level of shrink is inherit to the nature of the supermarket business, retailers shared best practices to limit controllable shrink. While best of class retailers averaged 1.2 percent total store shrink, the average among all respondents was 2.9 percent. Improved tracking, analysis and reporting was the number one way in which retailers reduce shrink.